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Non linear loads create harmonics in the system and consequently pollute grid in distributed power generation system. Grid pollution due to harmonics is highly undesirable. This paper presents synchronous reference frame (SRF) based control scheme which can be used to regulate harmonic flow in the system. Load current sharing is achieved between grid and a distributed generation (DG). Real, reactive, negative sequence and harmonic current components of load current are decomposed separately using SRF theory. Results are obtained for two different configurations of non-linear loads. The control algorithm is developed to regulate the flow of harmonic currents in desired manner between the utility grid and DG. The control is developed such that even with nonlinear loads, the grid currents are sinusoidal and linear. The current controller helps to improve power quality of the system.